New Delhi: In line with global trends in thepharmaceuticals sector, the focus of domestic drug firms on acquisitionsto consolidate their position will limit deleveraging for thetime being, rating agency Fitch has said.
"The ongoing focus of the top Indian pharma companies' onselective acquisitions to limit deleveraging over the shortterm," Fitch said in '2017 Outlook: Indian Pharmaceuticals'.
These acquisitions will help the companies to consolidate
their positioning, with deleveraging likely only over the
medium term as the acquired businesses contribute incremental
earnings, it added.
"Many firms (including Sun, Dr Reddy's, Lupin and Cipla)
have actively pursued acquisitions...in order to augment their
existing drug portfolios and solidify their presence in both
existing and new geographies," Fitch said.
It pointed out that domestic pharma market would continue
to grow on account of higher consumer spending, urbanisation,
improving access to medical facilities and health insurance,
and the growing prevalence of lifestyle diseases.
According to Fitch, the regulatory compliance remains the keyfor growth and it "expects pharma companies with a strongregulatory compliance track record to benefit from a fasterpace of Abbreviated New Drug Application (ANDA) approvalsunder GDUFA in the US market".
"Drug approval by USFDA to Indian drug companies hasalmost doubled to over 200 in FY15-FY16 over the prior period,and Indian pharma companies now represent about 30 per cent(by volume) and 10 per cent (value) of the $70 billion -80 billion US generics market," Fitch said.
Furthermore, the US drug regulator aims to implement the GDUFA IIframework from October 2017, which gives some guidance on afurther reduction in approval timeframes. "This will benefitIndian pharma companies in boosting their presence in the US,"it added.